Corporate Social Responsibility &

Ethics

FACILITATOR

Prof. Dr. Mohammad Majid Mahmood

0333-5188677, majidbagram@yahoo.com

CSR & Ethics

• In the business world, ethics is the study of

morally appropriate behaviors and decisions,

examining what "should be done”

CSR & Ethics

• Corporate Social Responsibility (CSR) is the

process by which businesses negotiate their role

in society

Corporate Social Responsibility

Organizations have obligations to society beyond their

economic obligations to owners or stockholders.

Social responsibility relates to an organization’s

impact on society

Recent Evidence of CSR Interest

• An Internet search turns up 100,000 plus responses to “CSR”

• Research Journals increasingly “rate” businesses (and NGOs) on socially responsive criteria:

– Best place to work

– Most admired

– Best (and worst) corporate reputation

Reasons for CSR Activities

• CSR activities are important to and even

expected by the public

– And they are easily monitored worldwide

• CSR activities help organizations hire and retain

the people they want

• CSR activities contribute to business

performance

Businesses CSR Activities

• Philanthropy:

– give money or time or in kind to charity

– Integrative philanthropy—select beneficiaries

aligned with company interests

• Philanthropy will not enhance corporate

reputation if a company:

– fails to live up to its philanthropic image or

– if consumers perceive philanthropy to be

manipulative

Corporate Social Responsibility (CSR)

CSR is the Sum of:

Economic Responsibilities (Make a profit)

Legal Responsibilities (Obey the law)

Ethical Responsibilities (Be ethical)

Discretional Responsibilities (Good corporate citizen)

CSR- two viewpoints

CSR is Inevitable

Vs

CSR is a Burden

Arguments for CSR

Not just profits!

Power vs. Responsibility

Stake holder relations

Arguments against CSR

From the shareholder point of view

Hindrance in maximizing profits

Choosing “moderate strategy”

Businesses need to balance economic, legal, and

social responsibilities in order to achieve long-

run success.

More generally, there is a relationship between

good social and good financial performance.

• The word ethics is derived from the Greek word ethos meaning character and Latin word mores meaning customs

• Ethics defines what is good for the individual and for society and establishes the nature of duties that people owe to oneself and others in society

• The principle of conduct – professional ethics

• A set of moral principles or values.

ETHICS

Why be ethical ?

Expectation of stakeholders

To prevent harm to general public

It pays to organization

A sense of trust among partners

Personal reason

Purpose of Ethics

• Ethics are the guiding principles.

• Ethics help make relationships mutually

pleasant and productive.

• Ethics Create a sense of community and a sense

of belongingness to society.

Are Ethics Limited to Humans?

• Are ethics limited to humans only or do they

extend to animals too?

– pure vegetarianism

• Likewise, issues of responsibility to the

environment have also been raised.

• In other words, philosophy is not far from the

religious view of total non-violence

The Evolving Context for Ethics

Ethical absolutism - they adapt to us

Ethical relativism - we adapt to them

Emergence of a Global Business

Ethic

• Growing business need for integrative mechanisms such as:

– Ethics reduce operating uncertainties

– Voluntary guidelines avoid government impositions

• Ethical conduct is needed in an increasingly interdependent world—everyone in the same game

• Companies wish to avoid problems and/or be good public citizens

Reasons for Businesses to Engage in

Development of a

Global Code of Business Ethics

• Create the same opportunity for all businesses

• Level the playing field

• They are needed in an interconnected world

Ways Companies Integrate Ethics

• Top management commitment in word and deed

• Company codes of ethics

• Develop, monitor, enforce ethical behavior

• Seek external assistance

No discrimination should be done on the basis of caste,

color, and religion

The polices should be fair and transparent

Proper provision of safety should be provided by the

company to the employees.

There should be honesty, loyalty, and integrity in the

employees.

The company’s resources should not be utilized by the

employees for their personal usage.

Ethical Principles

• Information about employee’s personal lives, health, and work

evaluations should be kept confidential.

• To neither give nor take any illegal payment, remuneration, gift,

donation, or benefits to obtain business or favors.

• To comply with all regulations regarding preservation of the

environment.

Ethical Principles

Ethical Principles

• Rights and equitable treatment of shareholders

• Interests of stakeholders

• Role and responsibilities of the Board

• Integrity and ethical behavior

• Disclosure and transparency

Advantages of Ethical Behavior

• Brand image

• Greater loyalty

• Greater commitment of employees

• Employees become more creative

Why have a Code of Ethics?

• To define acceptable behavior

• To promote high standards of practice

• To provide a benchmark for self-evaluation

• To establish a framework for professional behavior

and responsibilities

CODE OF ETHICS -TRANSITION

Compliance

Enforcement

Punishment

Directive

Secretive

Integrity

Inspiration

Motivation

Educational

Open

Are Ethics and Business

Compatible?

Are Ethics & Business Compatible?

• In an extreme, business and ethics may seem incompatible:

– Earning profits may also be unethical

– In Islamic finance, earning interest is unethical

– Possession itself may be unethical in extreme sense

• Lots of businesses may need violence of some degree: – E.g., Medical research

• Where do we draw the line between business and morality: – If the approach is subjective, then ethics lose their meaning as

everyone defines ethics to suit one’s convenience

Ethics and Society

• In fact, ethics serve society

• Societies are built on support

• All societies, whether those of humans or non-humans, need mutual support, patience and care.

ETHICS IS LONG TERM POLICY

• All religions, all ethics and morals spring from the basic conflict between short term and long term:

– If we limit ourselves to the short term:

• Pleasures today, even at the cost of pains tomorrow, sound like a good bargain

– If we take long term into account:

• Every such pleasure which is not lasting, should be avoidable

• Long term is how long:

– Do we look at our lifetime?

– Do we look at the lives of our children?

LONG TERMISM IN BUSINESS

• Issues of corporate ethics have taken the form of short-termism vs. long-termism

• If businesses are focused on long term stability and growth, they are ethical:

– Short term strategies compromise on longer interests

• Warren Buffet has stressed on long term strategies

• McKinsey survey shows that companies are focused on short term strategies due to market pressures

TELEOLOGICAL DEONTOLOGICAL VIRTUE ETHICS

No act is wrong or

right in itself, only in

terms of its

consequences

Acts are wrong or

right irrespective of

their consequences

Acts are wrong or

right depending on

what the morally

good person would

do

Do the best thing Do the right thing Be the most honest

person

Do what produces

the better outcome

The right thing may

not produce the best

outcome

Being good is a

matter of character

Ethical Theories

Why ethical problems occur in

business?

1) Personal gains and selfish interests

2) Competitive pressure on profits

3) Business goals vs. personal values

4) Cross cultural contradiction

Typical issues of ethics in business

Bribery and kickbacks

Corporate crime, e.g. Price fixing

Employee issues

Product issues, e.g.. Patent and copyright violation,

product defects

Warren Buffet’s

Rule of Thumb for Ethical Conduct

• “…I want employees to ask themselves (when

they are in doubt about whether a particular

conduct is ethical or not), whether they are willing

that their act appear the next day on the front

page of local paper – to be read by their spouses,

children and friends.”

[Berkshire, code of ethics]

Coca Cola International

“Make every drop count”

Mission

“To refresh the world in body, mind and spirit”

“To inspire moments of optimism through our

brands and our action”

“To create value and make a difference everywhere

we engage”

Values

Leadership

Passion

Integrity

Accountability

Collaboration

Innovation

Quality

Company Profile

Worlds largest liquid non-alcoholic refreshments producer.

Headquarter in Georgia Atlanta, USA

Powerful Brand

Interbrands 2011 ranked coca cola the no.1

brand in the world and estimated its brand

value at $150 billions.

Coca Cola in Pakistan

Established in 1964

Corporate Social Responsibility

The good side of picture

Coca-Cola and its Employees

Coca-cola’s top priority for the

employees are:

Health and safety

Training and development

Respect and rights protection

Code of Conduct

Employees Must:

Avoid conflicts of interest

Safeguard the company nonpublic information

Never attempt to accept bribe

Fairly deal with customer and suppliers

Protect the company asset

Must report violations

Coca-Cola and Environment

Establish objectives and targets

Work with local communities

Use recycle able packaging

Comply with local environmental laws

Community

Education

Providing education to youth in

underdeveloped areas of China

Improving their infrastructure

Libraries

Community (Cont’d)

Community (Cont’d)

Sports

Encourage more active

lifestyles

physical and nutrition education programs

Environment

Environmental Performance

Aspire to environmental excellence

Focus on environmental efforts on three area:

1. water use;

2. packaging; and

3. energy use & climate protection.

Unethical practices

The Bad Side of the Picture

Acidity Tooth decay

Benzene Heat and light convert calcium benzoate

into benzene

Water use

9 liters of water to produce one liter of coke

water contamination

decreasing water level

Criticism on Coca Cola

in Colombia

Coca cola in Colombia

More then 70 years in business

Employs more than 2000 Colombians.

5000 retailers.

Volatile Environment

Internal conflicts in Colombia

Unions

Despite the unstable environment ,coca cola provide

safe and stable economic opportunities.

Employee’s Benefit

Cola Cola provides its employees with:

Emergency cell phones

Transportation services

Secure Housing

Additional security for union leaders

24 hour hot line

Criticism Coca Cola Company is a killer

Hires agents to kill union leaders

Is Against the Unions

Case of Isidro Segundo Gil

Protests

Colombian Court Ruling

The court ruled out that there was no solid

evidence that would prove that the Coca Cola

Company and the Colombian bottlers were

involved in the murders of the union members.

Where is Coke standing

The Coca-Cola business system has a tradition of giving back to the communities it serves

Still the company is facing a lot of issues in third world countries

Conclusion

“Those who can see the deepest into

the past can also see farthest into

the future”

Thank you

for your kind attention!

FACILITATOR

Prof. Dr. Mohammad Majid Mahmood

0333-5188677, majidbagram@yahoo.com